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Marginal Tax Rate Estimator

Estimate the marginal rate by comparing total tax before and after a specified increase in taxable income. This approach works with any tax schedule as long as both tax amounts are calculated under the same rules.

The result shows the share of the added income absorbed by additional tax. It can support bonus, overtime, investment, or pricing scenarios, but it does not automatically include payroll taxes, benefit phaseouts, or other indirect effects unless those are included in the tax figures.

Enter your assumptions

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Result
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Estimated result
Incremental tax—
Additional income—
Estimated marginal rate—
After-tax additional income—

1. Use one tax period
Enter all income, deductions, payments, and rates for the same tax year or modeled period.

2. Enter the source amounts
Use records or a prepared estimate rather than mixing gross and net figures.

3. Apply the correct treatment
Choose rates and deductions that match the jurisdiction, taxpayer, asset, or entity being modeled.

4. Review the breakdown
Check intermediate values for duplicated deductions, missing payments, or an unintended zero result.

5. Test another scenario
Change one assumption at a time to see which input drives the estimate; use Reset to restore defaults.

Incremental tax = Tax at higher income − Tax at current income Estimated marginal rate = Incremental tax ÷ Additional taxable income × 100 After-tax additional income = Additional income − Incremental tax

What the result means

The displayed result applies only to the assumptions entered and the simplified calculation shown above.

This is a planning estimate, not tax advice. Tax rules vary by jurisdiction, entity type, filing status, holding period, deductions, credits, and tax year.

Given: Tax rises from $14,768 to $16,968 when taxable income increases by $10,000.

Calculation: Incremental tax = $16,968 − $14,768 = $2,200. Marginal rate = $2,200 ÷ $10,000 × 100 = 22%.

Result: The estimated marginal rate is 22%, leaving $7,800 of the additional income after the modeled tax.

Why use two total-tax amounts instead of a bracket rate?

The comparison can capture the combined effect of brackets, surtaxes, and phaseouts already included in the two tax calculations.

How large should the additional-income amount be?

Use the increment relevant to your decision. A very large increment may cross several brackets, producing an average incremental rate rather than a rate on the next dollar.

Can the rate exceed 100%?

It can mathematically if added tax and lost benefits exceed added income, though that often signals that broader phaseout effects are included or inputs need review.

Does this include state tax?

Only if both total-tax inputs include state tax. Use the same tax components in both values.

How is this different from the effective rate?

The marginal estimate measures change in tax divided by change in income. The effective rate divides total tax by total income.